FAO Regional Conference for Africa:

FAO: AFRICA SHOULD INCREASE PUBLIC INVESTMENT IN AGRICULTURE

Rome, 21 February - African countries should increase public investment in
agriculture to promote private sector participation and improve agricultural
growth, according to the UN Food and Agriculture Organization (FAO). Judging
from the successes of some Asian and a few African countries, governments
in Africa should allocate at least 25 percent of the national budget to
agricultural and rural development programmes. FAO made the recommendations
in a paper prepared for the 21st Regional Conference for Africa, in Yaounde,
Cameroon (21-25 February).

Increased public spending could reduce the problems of Africa's small-scale
farmers and encourage greater flow of private investment to the rural sector,
FAO said. In the near term, agriculture will continue to have the greatest
impact on food security and poverty in Africa. The sector will remain the
primary engine of economic growth. It produces the bulk of food consumed
in sub-Saharan Africa and accounts for 70 percent of total employment.

Between 1961 and 1997, agriculture received less than 10 percent of the national
budget in most countries, yet its contribution to gross domestic output was
between 30 and 80 percent. "What makes the situation even more disturbing
is the fact that direct and indirect transfers of income from agriculture
to government and the rest of the economy continue to be significantly larger
than the amount of public resources allocated to the sector," FAO said.

Even in countries where significant investments were made to develop public
agricultural capital goods, governments often failed to maintain and manage
such capital investments as roads and irrigation systems. In addition, public
resources were often allocated to a single cereal crop, such as rice, maize
or wheat and not enough to traditional crops like roots and tubers, and pulses
and oil seeds.

The decline of the agricultural sector and the marginalization of African
countries are illustrated by the poor performance of the food and export
crop sectors during the last decades, according to the report. Africa
significantly lost market share for traditional export crops and had to rely
increasingly on food imports and food aid.

Among major export crops, the production share of cocoa fell from 71.6 percent
in the 60's to 58.7 percent in the 90s, while the market share dropped from
78.9 to 64.7 percent. For coffee, the production and market shares declined
from 25.9 and 28.8 percent in the 60's to 18.6 and 18.5 percent in the 90's.

Between 1961-97 the growth rate of cereal output in sub-Saharan Africa was
lower than that in other developing countries.

To significantly enhance agricultural growth and development in Africa, FAO
advocated a series of actions be carefully considered, including: a lower
tax rate for farmers; making credit available and accessible particularly
to small-scale farmers, 80 percent of whom are women. FAO also said that
a liberalised exchange rate policy benefits agriculture.